 Korea in the Tech Crossfire: Strategic Responses to the US-China Decoupling in Batteries and SemiconductorsKye Hwan Kim (),
Jooyoung Yang () and
Eun Kyo Cho ()
No 24/2, Research Papers from Korea Institute for Industrial Economics and Trade Abstract: China and the United States are both pursuing strategic de-risking to navigate the murky waters of their relationship, fraught with conflict but bound by trade. De-risking is essentially a kind of industrial policy that focuses on dominating advanced technologies and industries, protecting technologies and markets, and courting the support of like-minded nations. Washington’s de-risking strategy for the semiconductor and battery sectors focuses on bolstering the competitiveness of American industries via internalization, supply chain diversification, and deeper partnerships with allies and friendly nations. China meanwhile is working to navigate the US sanctions regime on technologies and supply chains by establishing China-centered industrial ecosystems and weaponizing key battery inputs, such as rare earths and other important minerals. In the chip sector, the reconfiguration of supply chains would simultaneously feature an accelerated decoupling in cutting-edge nodes and the creation of alternative supply chains in Southeast Asia and India that support mature nodes. Battery supply chains are likely to be reshaped by the rise of major regional blocs or markets (encompassing China, South Korea, and Japan) and concentration of technologies and manufacturing capacity in a few multinational corporations. Korea should pursue a five-pronged industrial policy to respond to these developments. First, it needs to invest in the establishment of vertically integrated industrial clusters. Doing so could transform the country into a trusted hub and middleman. Second, the Korean government should adopt an industrial policy that fosters these clusters. Third, Korea should strive to become a major production hub capable of meeting the high standards necessitated by new protectionist policies. Fourth, Korean firms should establish overseas bases of these integrated clusters as well. Finally, Korea should work to promote green technology partnerships as a viable alternative to the current international trade order. Only with a multifaceted and systematic de-risking policy can Korea hope to overcome the challenges posed by the fragmentation wreaking havoc in contemporary supply chains. Keywords: semiconductors; chips; batteries; EVs; China; US; Korea; US-China conflict; de-risking; supply chains; supply chain risk; supply chain diversification; industrial policy; supply chain weaponization; Korea; KIET (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ris:kietrp:2024_002 Access Statistics for this paper More papers in Research Papers from Korea Institute for Industrial Economics and Trade Sejong National Research Complex, Korea Institute for Industrial Economics and Trade, 370 Sicheong Dae-ro C-dong 8-12F 30147, Republic of Korea. Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.